indies say they can retain a third of new customers
Optimistic independents expect to keep more than a third of the new customers they’ve managed to acquire since lockdown began in March, according to an exclusive survey carried out by The Wine Merchant in association with Liberty Wines.
Two out of three respondents say customer numbers have increased during the lockdown period and into the beginning of August. When asked to suggest how many of these new customers would be retained once the threat of Covid-19 has receded, the average prediction was 35.8%.
It could be argued that merchants are now in a good position to gauge their long-term retention rate, with rivals such as Majestic, The Wine Society and supermarkets now trading more fluidly than they were in April and May.
Overall, the average sales growth figure for the March to July period for all respondents in the survey (including those who report a sales decrease) was 43.9%, with the biggest average growth coming in April at 65.6%.
Wine merchants are finding that new customers are vocal about supporting local businesses and appreciate the service they get from independent wine shops.
But keeping these consumers satisfied and engaged often involves tweaking ranges to suit different pockets.
Bruce Evans at Grape & Grain in Crediton says: “The traditional customers are still around. The new customers are after entry-level wines, to support local business, and replace the reliance on supermarkets, with their long delivery times.”
James Brown of Wine Loft in Brixham adds: “We are managing to hold on to our new lower-end customers with a combination of in-store experience and delivery services.”
R Campbell & Sons in Leyburn is a Costcutter member because of a grocery element in its sales mix, but Richard Walker of the business says he has been exploring new avenues for wine supplies.
“We have bought in more of a range of sub £10-wines from independent agencies due to the lack of availability of the supermarket brands,” he says.
“This has benefited us through the margins and hopefully will have turned a few customers’ heads to what quality you can get at around £10 a bottle.”
Local deliveries have been the big success story of the past five months, accounting for 43.3% of independents’ revenues, up from just 5.5% during the same period in 2019.
National deliveries and e-commerce have increased their share of turnover from just 4.2% in 2019 to 11.5% currently.
Cat Brandwood at Toscanaccio in Winchester says her wine range has been expanded in response to extra lockdown demand – and many of the new lines she now lists will be retained beyond the short term.
“It seems the website will continue to benefit from increased sales – and not only locally – so keeping a broader range is sensible,” she says.
deliveries up as wholesale suffers
With the prolonged closure of the on-trade, it was little surprise that hybrid-style drink-in sales and wholesale took the biggest sales hits for merchants during lockdown.
Drink-in sales fell from 8.2% of all respondents’ sales in 2019 to 2.5%, while wholesale fell from 19.5% in 2019 to 5.2% between March and July this year.
The survey suggests that the shifting mix from wholesale and on-trade to retail and home deliveries caused a big rethink of – or stop on – sourcing for many shops.
Chris Hill, of Latitude Wine in Leeds, says: “Our spirits sales have collapsed, but our retail wine sales have flown.
“We’ve taken the chance to clear some space on the shelves and phase out a couple of suppliers. A few of our wine suppliers have seen a massive up-tick in orders. I only started ordering spirits again in July as our wholesale business picked up again.”
Duncan McLean of Kirkness & Gorie in Kirkwall, Orkney, says he started the Covid period fully stocked with wines for the summer season that never was.
“With all restaurants closing in late March, we were left with vast stocks and nowhere to sell them, so we transformed our previously minuscule delivery business into the main focus of our company,” he says.
“This was hard work, but it resulted in us being able to sell most of our stock, pay outstanding invoices, and be in a position to restart more conventional retail in July, and trade sales in August.
“We found that home-delivery customers were more willing to experiment and buy all manner of strange wines if we described them nicely or included them in mixed cases.”
Rupert Pritchett at Taurus Wines near Guildford says: “Although our percentage growth in June was the smallest, being peak wedding season it was always going to be the tough month to beat as we had a huge amount of wedding and party business to replace.
“We can service up to 20 events per weekend in the summer.
“Average margin is hugely up and overheads have dropped drastically as wedding business is great for volume, but miserable for average margin, as well as being very staff intensive.”
One store found an opportunity in the on-trade’s woes. “By sourcing wines from bankrupt hotels, restaurants and pubs our average bottle price has become £5.99 with a good margin,” says Matt Ellis of The Smiling Grape in St Neots.
Indies adapt to changing demand
Ranges and prices have been juggled by retailers to suit new market conditions, our survey shows.
While one in four merchants say their range hasn’t changed, 38.1% increased the number of wines they sell and say they intend to keep things that way in future.
But there’s evidence that indies are being more selective about their buying options, with 46.4% saying they have decreased their supplier base in some way, either a little or significantly.
Four out of 10 respondents have been selling more wines under £10, compared to just over a quarter doing brisker business between £10 and £15.
Several retailers note that case deals have been playing an important part in their product mix, often going hand in hand with an increased focus on deliveries and online.
Jane Taylor at Dronfield Wine World says: “We found that in the early stages of lockdown we were getting orders for large quantities of our cheaper wines. This is now dropping off. We also put on special offers on mixed cases. Demand for these continues to be strong.”
Dan Kirby at The Suffolk Cellar in Beccles says: “Our retail range starts at £15, but we’ve seen more people picking up case deals to bring that price down to £12.50.
“We’ve increased the range of £15 wines, from five to about 10 SKUs, but have also seen better than average sales at all price points.”
Andy Smith, at Mill Hill Wines in north London, says: “Early on we sold much more sub-£10 wine but as the supermarkets sorted their deliveries out things are going back to normal.”
David Dodd at Tivoli Wines in Cheltenham says: “We’ve been selling more wines at all price points across our range, but our average bottle price has dropped from £16 to £12, though products per transaction have risen from 2.4 to 3.6.”
Some stores also report an upturn in sales of more expensive wines as shoppers look for treats.
Riaz Syed, at Stonewines in Whetstone, says: “Since July, we have seen a slight increase in higher value stock, such as Champagne and white Burgundy, perhaps seasonal or reflecting increases in social interaction.
“I sense those still working have saved money by staying in or not commuting.”